Focus of Tuesday's session was on RBA interest rate decision and the following statement. The Reserve Bank of Australia held its cash rate at a record low 2% Tuesday as expected on Tuesday, signalling scope for easier policy if future economic data warrants such a move. In a statement, the RBA said the Australian economy was getting better. “The expansion in the non-mining parts of the economy strengthened during 2015… Surveys of business conditions moved to above average levels, employment growth picked up and the unemployment rate declined in the second half of the year, even though measured GDP growth was below average.”
The Australian dollar, which the RBA said last year was overvalued, “has continued its adjustment to the evolving economic outlook.” RBA governor Glenn Stevens took note of solid domestic economic momentum despite recent global financial market volatility. "New information should allow the Board to judge whether the recent improvement in labor market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand," he said in a statement after the RBA's monthly board meeting.
From Australia, on Wednesday, Trade Balance and Building Approvals data was published. In trend terms, the balance on goods and services was a deficit of $3,313m in December 2015, an increase of $168m (5%) on the deficit in November 2015. In seasonally adjusted terms, the balance on goods and services was a deficit of $3,535m in December 2015, an increase of $808m (30%) on the deficit in November 2015. Analysts were anticipating deficit of $2,450m. Goods and services credits fell $1,243m (5%) to $25,247m, while goods and services debits fell $434m (1%) to $28,782m.
The trend estimate for total dwellings approved fell 0.1% in December and has fallen for eight months. The seasonally adjusted estimate for total dwellings approved rose 9.2% in December following a fall of 12.4% in the previous month. This was above expectations on 4.8% increase. The trend estimate for private sector houses approved rose 0.1% in December and has risen for three months. The seasonally adjusted estimate for private sector houses rose 5.4% in December after falling for three months.
Thursday's session was marked by Quarterly NAB Business Confidence figures were released. Prior to the recent market retreat, however, business confidence actually recorded a rebound, lifting 3 points to +4 index points. This in large part is a reflection of business conditions (how firms feel about their own business), which also held up at elevated levels (+9 index points) despite easing back slightly in the quarter. According to Mr Oster, “the real insight from this survey is seeing how firms are feeling about the outlook for their business and the economy. It certainly seems like they are remaining quite upbeat about the outlook, which suggests good things for the labour market and future investment.”
Friday's session was brought Australian Trade Balance data. The latest Australian Bureau of Statistics (ABS) Retail Trade figures show that Australian retail turnover was relatively unchanged in December 2015, missing forecasts on 0.5% increase and following a rise of 0.4% in November 2015, seasonally adjusted. In seasonally adjusted terms there were rises in food retailing clothing, footwear and personal accessory retailing and department stores. Household goods retailing, other retailing and cafes, restaurants and takeaway food services fell in December 2015.
This week markets will be looking at:
Westpac Consumer Sentiment (Wednesday 00:30)
Home Loans (Friday 1:30)
